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Interest Rate Risk
−Removed: Interest rate exposure relates primarily to the effect of interest rate changes on borrowings outstanding under our revolving credit facility and term loan facilities that are subject to variable interest rates, and on our investments in marketable debt securities.
+Added: Interest rate exposure relates primarily to the effect of interest rate changes on borrowings outstanding under our revolving credit facility and term loan facilities that are subject to variable interest rates, and income earned on our investments.
We mitigate our interest rate exposure with interest rate cap agreements.
−Removed: On December 21, 2022, the Company amended its existing interest rate cap agreements in conjunction with the amendment to its senior secured credit facilities, and replaced the one-month LIBOR rate with the one-month term SOFR rate.
In June 2020, we entered into interest rate cap agreements with a total notional value of $800 million, designated and accounted for as cash flow hedges from inception, to provide us with interest rate protection in the event the one-month LIBOR rate increases above 1% (effective December 30, 2022, one-month term SOFR rate increases above 0.9%).
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At December 31, 2024, we had borrowings outstanding of $951.0 million under our term loan facilities and no borrowings outstanding under our revolving credit facility, which were subject to a weighted average interest rate of 4.88% during the year ended December 31, 2024, including the impact of the interest rate cap agreements.
−Removed: Based on the borrowings outstanding under the senior secured credit facilities during 2023, we estimate that had the average interest rate on our borrowings increased by 100 basis points in 2023, our interest expense for the year would have increased by approximately $1.9 million, including the impact of the interest rate hedge agreements.
+Added: Based on the borrowings outstanding under the senior secured credit facilities during 2024, a hypothetical increase in interest rates of 100 basis points in 2024, would have had an immaterial impact to our interest expense for the year, inclusive of the impact of the interest rate hedge agreements.
These estimates assume the interest rate of each variable rate borrowing is raised by 100 basis points.
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Therefore, the estimated increase in interest expense as calculated above may not be indicative of future expenses.
−Removed: As of December 31, 2023, the fair value of our interest rate cap agreements was an asset of $29.0 million, included in other assets on the consolidated balance sheet.
+Added: As of December 31, 2024, the fair value of our interest rate cap agreements was an asset of $14.7 million, of which $8.4 million was recorded in prepaid expenses and other current assets and $6.3 million was recorded in other assets on the consolidated balance sheet.
During the year ended December 31, 2024, our wholly-owned captive insurance entity purchased and sold marketable debt securities, which were classified as available-for-sale.
As of December 31, 2024, the fair value of the available-for-sale debt securities was $33.7 million, with $11.7 million included in prepaid expenses and other current assets and $22.0 million in other assets on the consolidated balance sheet.
−Removed: Our investments in debt securities primarily consist of U.S.
+Added: Our investments primarily consist of U.S.
Treasury and U.S.
−Removed: government agency securities that carry a fixed coupon rate, as well as certificate of deposits, and treasury bills with maturities greater than three months.
+Added: government agency securities, corporate bonds and certificate of deposits.
As of December 31, 2024, a hypothetical increase in interest rates of 100 basis points would not have a material adverse impact on the fair value of our investment portfolio.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.